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Sunday, January 10, 2010

Where Are Those Green Shoots? It's the Economy Stupid. And John Mauldin.

It's now been about 5 months since we started hearing about those green shoots that indicated our economy was on the rebound. It seemed like most people agreed at the time. I didn't. I wondered how the economy could be on a rebound when all signs pointed to the contrary. So job losses weren't as bad one month, less people were on unemployment, and the market was up. That was all it took for a rebound?

It seems almost elementary when I think about how ridiculous those statements are and how easily the green shoots theory can be turned right around? Let's think about this. What is one possible reason for there to be fewer people collecting unemployment? Well, how about the fact that there is a certain segment of the population who have been on unemployment so long that their benefits are beginning to run out. Come on - is it that hard to realize that? Or maybe since job losses fell last month, there are fewer first time unemployment filings.

And since when does the following statement make sense to so many people? "Well it wasn't as bad now as it was last month, so that must mean it's getting better". Less bad and getting better are by definition quite different. Sure, the economy may not be sucking at a rate as fast as it was last month - but that's a far cry from getting better.

Now I know John McCain was espousing how the fundamentals of our economy were sound a few years back. I still chuckle at this. And I still say the fundamentals of our economy suck. Forget about the increase in spending this administration is going through. Don't get me started. How about the continuous bailouts, the secret AIG deal, increasing military spending, states running out of money at a ridiculous rate, lack of oversight on Wall Street as, which I assure you only makes sense to those who manipulate the market, it continues to rise.

Or how about Medicare and Medicaid running out of money, social security debt looming, and... wait for it... our uncontrollable debt which doesn't seem to be an issue to anyone.

I've been reading quite a bit of John Mauldin recently. He's an interesting investment adviser and analyst and I think he's spot on with his comments. He's one of the few people I've read who isn't all that optimistic about markets and the economy and it's a breath of fresh air - because IT MAKES SENSE! You can subscribe to his newsletters for free here: John Mauldin - at the bottom of the page. It'd be good for you, I assure you. Open up that mind.

3 comments:

Mauldin is a good guy, you might also want to check out the daily news letter from David Rosenberg, formerly at Bofa/ Merrill, now at at Gluskin Sheff (a canadian asset manager). He's super bearish, he finds the 'recovery' more laughable than you. You can subscribe to his newlsetter, great read. Also check out the newsletter for Hussman Funds.

Unemployment has nothing to do with how many people are collecting unemployment, it's a survey of 60,000 people done each month, but your point is not lost on me, young grasshopper.

@Jon - Just read his stuff...and signed up for his newsletter. Love the bearish outlook. Wish the media would realize what the hell is really happening. But what about those Wall Streeters pushing the market up? I'm too naive to understand how the hell that happens? Any insight on that?